Some businesses that thought their business interruption insurance would cover the losses they”™ve been sustaining as a result of the Covid-19 shutdowns have been in for rude awakenings, according to what an attorney who specializes in insurance matters told the Business Journal.
“Right now one of the real hot topics in the insurance industry is business interruption claims as it relates to Covid-19,” attorney Lorin Donnelly of the insurance practice group at the law firm Milber Makris Plousadis & Seiden LLP (MMP&S) said.
“Generally speaking, the policies that afford coverage for business interruption require direct physical loss and just because you’re shut down does not mean you suffered a physical loss. It”™s usually a property damage-type situation.
“Insurance companies obviously review every claim that comes in and they examine the policy language to determine if the business interruption claim is actually afforded coverage under the policy. However, most of these claims are denied by the insurance company because there’s no direct physical loss. So, the policyholders then commence litigation to have the courts determine whether there’s coverage or not.”
Donnelly is one of three partners at MMP&S who specialize in insurance matters.
“One of the partners in the firm used to handle a lot of insurance coverage and he needed assistance and he taught me how to do it and I’ve been doing it for the past 19 years or so. One of the other partners, she was my associate, and I taught her. And one of the other partners, he used to work for an insurance company,” Donnelly said.
Insurance is one of more than a dozen practice areas at the firm. The firm has handled cases against insurance companies as well as defending them.
Donnelly usually works out of the MMP&S office in Woodbury or its White Plains office at 709 Westchester Ave., but has been doing a lot from home because of Covid-19.
MMP&S recently signed a long-term lease for 25,000 square feet at 100 Manhattanville Road in Purchase, a 290,631-square-foot Class-A office building. The firm anticipates moving in March 2021 from its space on Westchester Avenue in White Plains. Newmark Knight Frank handled the full transaction with Executive Managing Director Patricia Valenti representing the tenant and Senior Managing Director Lawrence Ruggieri representing the landlord, RPW Group, Inc.
“The pandemic has certainly taught us how to become more agile in the ways we work and communicate on behalf of our clients,” said Valenti. “In this climate, while we were unable to schedule traditional in-person space planning and architectural meetings, we were highly successful in designing the space virtually, and RPW”™s style of developing personal relationships was even more effective by Zoom. The close connections that we established during the early months of the pandemic solidified the firm”™s decision to relocate and grow into the new space.”
According to Mark Seiden, a founding partner of MMP&S, “Our attorneys and staff overwhelmingly want to return to an office setting where they can benefit from collaboration and mentorship, fundamental to the MMP&S culture. Our new Westchester office will accommodate both employee growth and space configurations for safe and effective collaboration.”
“A lot of what we do is basically reviewing insurance policies to see what coverage they afford, whether any exclusions in the policy would apply to a certain claim, whether a claim was reported in accordance with the requirements of the policy,” Donnelly explained.
“It’s recommended that you review a policy with somebody who knows the policy language and the implications of certain exclusions and also to determine what type of coverage you really need in terms of your business.”
She said that while insurance brokers or agents are very knowledgeable, they may not have the law background to take into consideration certain circumstances that may relate to a particular business.
Donnelly said that insurance cases can be complex and used a construction site accident as a hypothetical.
“If I”™m a general contractor, I have my own insurance policy and the insurance policy is covering me for a particular claim. However, the subcontractors that I hired also were required to get insurance naming the general contractor as an additional insured. We would bring an action to have their insurance carrier pick up the defense and indemnification. It adds an additional layer of coverage for the general contractor,” Donnelly said.
She noted that one benefit of winning such an action would be that, because the general contractor”™s insurance company doesn’t have to pay, there might not be an impact on the record of the general contractor and the insurance premiums it would have to pay in the future.
“A lot of what we do is not necessarily litigating. It is a specialty and it’s really important for the policyholders to really know what their insurance coverage is providing and what it doesn’t provide for,” Donnelly said.
“It is something that any businessperson should have someone take a look at and be sure that they get the coverage that they need and require and that meets the requirements of a contract, or a lease, or construction agreement. It’s a specialty.”
